Life beyond mint: How we build successful NFT collections?

I entered the web3 space in 2017, through Steemit - a blockchain-based blogging and social media platform that rewarded its users for publishing and curating content with its native STEEM token. Soon after, I became interested in CryptoKitties (although I wish it was CryptoPunks instead) and before I knew it, I was deeply immersed in NFTs.

It was a wild ride.

The bull market was a rollercoaster, and although it brought me more experience than profits, I consider that a great outcome. Why? Because it prepared me for the bear market and, most importantly, I gained a deeper understanding of the major challenges that we face as builders and collectors.

So, let's get back to the point. This post, as the title suggests, is about builders and the challenges they face - challenges that many of us don't take into consideration when investing in a project. I was motivated to write this because I feel that we often don't show enough understanding, and usually judge without seeing the whole picture.

Before we proceed, let me clarify something.

In my opinion, builders are people who create projects based on their honest expectations of market success and sustainability.

For the sake of mutual understanding, let's agree that people who create a project simply to profit from it and then abandon it are not builders. We can call them rug pullers, scammers, or fraudsters - but not builders.

Now, let's go deeper and talk about the product life cycles today. I intentionally switched from "project" to "product" because the majority of NFT projects can be viewed as startups that enter the market via their products (collections).

What I am going to write should not be seen as a universal truth, as there are nuances in everything and web3 is no exception. However, I believe it will be enough to describe the general situation.

Today, we can view NFT collections in three scenarios based on their lifecycle:

• Scenario A: Collections that never mint.

• Scenario B: Collections that mint, have a small/insignificant secondary volume, and eventually die.

• Scenario C: Minted collections that keep the market interest.

It is important to note that we are still dealing with a relatively underdeveloped market. Therefore, we cannot always observe the lifecycle through the basic phases (market introduction, growth, maturity, saturation, and decline), but we can find enough analogies to draw meaningful conclusions.

Let's get started.

Scenario A: Collections that never mint.

I talk to founders every day, and many of them say the same thing: "My idea is great, but the market is not ready for it." However, no matter how hard we try to find excuses, the reason is always the same—the product was not developed on a sustainable basis. The truth may not always be pleasant, but if your idea does not match the preferences of your target group, it is simply not good.

Another misconception is that bad marketing is to blame for the collection's failure. While marketing is crucial for the success of any product, many make a critical mistake by exclusively focusing on advertising.

In the theoretical basis of marketing, we have the "4P" model: product, place, price, and promotion. It is the first "P" where most people go astray. Without a quality phase of product development, we cannot expect success, no matter how much advertising we invest in.

Scenario B: Collections that mint out, have a small or insignificant secondary volume, and eventually die.

Having an idea that's based on market needs is the foundation of good product development, but it's just the beginning. It's disheartening to see a collection that generates public interest only to be forgotten immediately after being minted. However, the blame for this isn't solely on the founders, but also on the community.

To prevent this, the collection needs to provide an experience that encourages collectors to keep their NFTs and not view them solely as a means of making a quick profit.

This is difficult in today's market. A significant portion of it is composed of degens - experienced minters searching for opportunities to make a profit, chasing generational wealth. The other significant part of the market is made up of newcomers, who have limited purchasing power but are also seeking to increase their capital quickly.

Both groups have a strong incentive to make money, so the decision to mint a collection is based on the potential gain. If the price rises after the mint, FOMO (fear of missing out) usually sets in, while FUD (fear, uncertainty, and doubt) arises after the first turbulence, often due to some buyers becoming the exit liquidity for experienced ones. Neither FOMO nor FUD is good for the success of a collection.

So, what needs to be done to prevent this? As mentioned earlier, the experience provided by the collection is crucial for building loyalty and ensuring market survival.

I see the experience as the set of values that enables initial identification with collection identity and creates the basis for loyalty development. The quality of the community that gathers around a particular project/NFT collection is what determines the experience's effectiveness.

Scenario C: Minted collections that keep the market interest.

As previously discussed, most projects can be viewed as start-up ideas, and every start-up project needs a sustainable business model. Most blue chip collections we admire today have sustainable business models that were planned in parallel with their mint and launch.

A sustainable business model brings stable cash flow, market positioning, expansion, and product upgrades from a founders perspective, while from the holders perspective we can talk about the improvement of the collector's experience, digital asset value growth, and additional benefits.

Elaborating on business models would require more space than this text allows. However, it's essential to note that the team must demonstrate significant levels of professionalism and business experience for the success.

Ok Singer, but forget the theory – give us an example!

It's coming right up!

If you follow me on Twitter, you probably know that Loser Club is one of my favorite collections. Their NFT is even part of the identity of this blog. The collection was launched in March 2022 and quickly became popular. Well, not as popular as blue chip projects, but still enough to be considered as a successful one.

Here is what attracted me to mint it and still keep some Losers in my bag.

Idea

At the time of the Loser Club launch, we were somewhere between a bear and a bull. Most of the big collections were already mooned and it was not easy to become a part of them. On the other hand, the market was saturated with bad collections, copies, and rug pull projects.

At that moment, I wanted to be part of the cool crew and for that, I had only two options: to shell out significant amounts of money (which I didn't have) or to find a collection that would become just like the ones I like and fantasize about.

And Loser Club announced its mint with a simple yet highly effective statement:

A very active team, excellent art by an artist named J'von, and the general atmosphere they created easily drew me in.

Experience

The context in which the experience was created is best described by the following quote:

This was completely in line with my principles. Immediately after the mint, a very diverse community was launched, and most importantly, the founders were active in it. You really had the impression that you were participating in the creation of something.

Business development

According to data provided by OpenSea, the collection generated a total volume of 7,346 ETH. When the mint price (0.088 ETH) is taken into account, it is clear that we are talking about significant capital here.

I won't go into details, but they had some really great moments. However, time is a strange factor, and although the founders started the business as a legal entity, the project fell into a crisis. According to the official announcement recently made by the team, part of the reason for this is "an unclear strategy in transitioning from a project into a business which can generate revenue from alternative sources, post mint."

Let's stop here. Before we start blaming the team for the obvious failures, let's try to understand their position.

Running an NFT collection and running a successful company is not nearly the same. The dizzying success of projects that were able to earn millions in just a few hours, even at the very end of the bull market, is also their biggest enemy. The real challenge was never getting the money, but rather the way in which the generated capital is handled.

On the other hand, optional royalties changed the rules of the game. In the past, projects relied on a constant inflow of money from the secondary market, which is no longer possible. In this regard, the need to transition to sustainable business models has become even more pronounced, but also significantly more difficult.

If you are interested in this topic, you can read my thread below (ofc this is just my opinion).

Let’s conclude this

What will happen with Losers remains to be seen. For me, it is still special because, from the first moment, it was not a way to make a profit but an experience that I wanted to be a part of.

Many will not agree with everything I said in this text, but we all can agree on one - building in web3 is a complex and challenging process.

I hope you found this text interesting, and if you made it to the end, I want to thank you from the bottom of my heart. I look forward to every comment, and I hope you will decide to subscribe to my newsletter because this is just the beginning.

Always yours, Singer.